Mobile apps have been changing their business models right under our noses. The newest model is called “Paidmium,” which refers to a mobile app that one must purchase from iTunes or Google Play – immediately requiring the user to either spend more money on in-app purchases or perhaps look at ads within the application.
Yep, you read that right. First you pay for the app, and then you pay more.
The current debate in the mobile marketing sector is whether or not Paidmium is superior to the more common mobile business model, Freemium. The truth is, the mobile marketing crystal ball is still a bit murky, and it is hard to say which business model will come out on top.
Freemium is the tried and true way for app developers to make money. Programmers create an app, offering it free to potential customers in the marketplace. Then, once the customer begins to use the app and learn its value, in-app offers are made available for the customer to purchase at will. Whether they pay or not, they can still utilize the original app, but their access to some of the other features may be limited.
According to a study by App Annie and IDC, apps based on the Freemium business model dominated in 2013. What this means is that, by and large, mobile users downloaded more Freemium apps – and spent more money within them – than users spent on any other type of app (i.e. Paidmium, Paid apps, or apps with in-app advertising). For developers who want to make some money, Freemium appears to be the model of choice.
Let’s change gears for a moment, though: suppose we consider the top fifty grossing apps for iPhones in the past year. Every single app was either a Paid app or a Paidmium app (save for two). That means that the biggest players in the business are charging for their apps to be downloaded in the first place. And perhaps you’ve guessed that top three highest grossing apps out of fifty were video game apps.
Mobile app gaming consumption may be the leader in time spent on mobile devices, but the success doesn’t stop there. In 2014, the mobile gaming app market was worth 17 billion dollars, and exactly half of the revenue from these games came from in-app purchases. When this kind of money is on the table, you can bet that a lot of developers are looking to get in on the Paidmium action.
Only time will tell which way the app business model will go, and what will be the preferred choice for mobile marketing campaign managers. As of late, most developers certainly prefer the Freemium model for its simplicity coupled with a broad customer base. But the Paidmium model is gaining traction (particularly with gamers), and we’re bound to see more apps that flourish under the Paidmium model.